Investors: McAuliffe Donor Gave 'Full Disclosure' on Scheme to Profit from Terminally Ill

27 Oct 2013

On Saturday, the Washington Post revealed further details on a scheme investing in the pending deaths of terminally ill patients which attracted the capital of Virginia Democratic gubernatorial candidate Terry McAuliffe.

Earlier this month, Breitbart News reported that McAuliffe admitted he was a “passive investor” in an investment fund organized by his friend and donor, Joseph Caramadre, that preyed on terminally ill patients. Caramadre’s fund would pay terminally ill patients a small amount of cash before their death and, at the same time, would purchase life insurance policies on them. When the patient died, Caramadre and his investors reaped huge profits from the dead patient’s death benefits.

Caramadre was convicted in 2012 of stealing the identities of some of the terminally ill patients for whom he purchased life insurance policies, making his investment fund the beneficiary without their knowledge. McAuliffe and the other investors have stated they were unaware of this aspect of Caramadre’s business conduct, and no legal authority currently doubts those statements.

Nonetheless, even the liberal Washington Post finds the legal aspects of the scheme of which McAuliffe and the other investors were aware morally questionable. “The ghoulish quality of that investment could add to the impression–created by his long history of controversial business and political schemes–that McAuliffe is an unscrupulous dealmaker,” Post reporter Laura Vozella wrote.

The Post story revealed several new pieces of information about the McAuliffe-Caramadre scandal.

According to the McAuliffe campaign, he invested $33,000 in the Caramadre fund and received $80,000 back in return, a $47,000 profit. Documents submitted in Caramadre’s trial by federal authorities indicated that McAuliffe’s profit was actually $80,000, or $33,000 more than he claimed.

When news of his investment in Caramadre’s scheme broke two weeks ago, McAuliffe promised to donate a total of $74,000 that he claims he obtained from his involvement with Caramadre to charity. In addition to the $47,000 profit he now claims he made, McAuliffe received a $27,000 donation to his 2009 gubernatorial campaign from Caramadre.

Though the McAuliffe campaign initially refused to disclose when he first invested in Caramadre’s “ghoulish” fund, the Post reports that McAuliffe invested with Caramadre “in late 2006 in a deal struck just two months before [a] 44-year-old mechanic died of cancer.” Under the deal terms, Caramadre’s fund paid the mechanic $5,000. The Post article suggests that McAuliffe’s profit on the death of the mechanic was $47,000. However, it is unclear if that $47,000 refers to McAuliffe’s overall profit from investing in Caramadre’s fund or his specific profit from funding the deal that paid the mechanic $5,000.

It is unclear whether McAuliffe knew that his investment in Caramadre’s fund benefited from the death of this particular 44-year old mechanic. The Post, however, reports that “at least some investors knew that they were betting on the lives of specific, dying individuals, according to two of them.” One fellow investor, Robert G. Flanders, admitted that “[t]here was certainly full disclosure to my law firm when we chose to invest in this.”

Representatives of the Caramadre fund delivered the benefits to the terminally ill patients who signed deals with them in envelopes filled with cash. “You think about it, it makes you sick to your stomach that human beings can prey on somebody else’s illness,” the sister of the mechanic who received $5,000 in cash from Caramadre’s representative two months before he died told the Post.

According to the Post, “[s]omeone working for Caramadre went to the mechanic’s house in early November 2006, when he was confined to his bed, rising with assistance only to use the bathroom, the sister said. He signed some papers and got an envelope filled with cash, the sister said.”

The Post also reported that McAuliffe failed to reveal his investment in Caramadre’s fund in his 2009 financial disclosures when he ran for governor of Virginia the first time. “His campaign said that was on the advice of his attorney, Joseph Sandler, former staff counsel for the DNC,” according to the Post.

Breitbart News has asked the McAuliffe campaign to explain the basis on which Sandler provided this advice, but as of the time of the publication of this story, had not received a response.